In December 1991, Mr Lawrence Summers, as chief economist for The World Bank, signed an internal memo penned by a staffer, Mr Lant Pritchett, on free trade policies for developing countries that the Bank (and the IMF as part of the Washington Consensus) was endorsing vigorously.

That memo would not have elicited any special attention but for a section, later claimed by Mr Summers as a satirical aside, that was leaked to The Economist . Its publication in early 1992 created a furore and evoked furious responses from developing countries, particularly Brazil.

The offending section began thus: “‘Dirty' Industries: Just between you and me, shouldn't the World Bank be encouraging MORE migration of the dirty industries to the LDCs (Less Developed Countries)? I can think of three reasons.” (emphasis in original)

Those reasons provided what even its most trenchant critics agreed was an “impeccable” exchange if considered from a purely “economic rationality” perspective — devoid of historical context, of the vagaries of the human condition encrusted in societies.

Transferring pollution to least developed, that is, least polluted countries, the memo said, was cost-effective, and not just for the advanced countries whose health costs among other things would dramatically decrease; LDCs would gain from a low-cost launch into industrialisation.

More than the adumbrated reasons for transferring polluting industries to the LDCs, it was the following paragraph in the memo that summed up the breathtaking amorality of the tacked-on section to the memo: “The problem with the arguments against all of these proposals for more pollution in LDCs (intrinsic rights to certain goods, moral reasons, social concerns, lack of adequate markets, etc) could be turned around and used more or less effectively against every Bank proposal for liberalisation.”

What the memo seemed to be telling the Bank was to ignore a given society's moral and social imperatives in the pursuit of an economic rationality, that is free trade.

Empathising with local customs, respecting “intrinsic rights,” social concerns; in short, the social compacts that determine a given matrix, however tenuous, holding developing countries together, could get in the way of policies designed for ‘national' economic growth. Growth is king; society and its mores its vassals.

Summers in BRIC

A “well-devised” idea, to paraphrase Isaac Babel, has ways of sticking around because reality is banal and so would like to emulate an idea. Two decades after the Summers memo, and its cold economic logic was junked, backward India and China and Brazil, in short the so-called BRIC countries, race ahead on the same “economic” reasoning that informed the infamous ‘aside' to the Summers memo — that incidentally has never been made public, except for the leaked section.

Almost every ‘BRIC' country was at one time or other relatively less polluted than the advanced countries (think China before 1978 unless one considers Maoism polluting).

Now keep the Summers' economic rationale in mind: the first “reason” for transferring polluting industries was the following: Since the cost of polluting industries is high in advanced countries because of earnings foregone “…a given amount of health impairing pollution should be done in the country with the lowest cost, which will be the country with the lowest wages. I think the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.”

Now consider this. Almost every country, and let's focus on India, that would have been incensed by the immoral logic implicit in the quote has aggressively industrialised using fossil-fuel power, thus fouling the air its subjects breathe; using cheap labour often with no social security (contract labour); exploiting low public health costs; and ruthlessly exploiting natural resources with scant regard for “intrinsic rights” and the “social concerns” of the local population.

There's more of the Summers memo than India would like to acknowledge. In his third justification for transferring “dirty” industries the memo says: “The demand for a clean environment for aesthetic and health reasons is likely to have very high income elasticity.”

So dismissive have BRIC members been of the “aesthetics” of clean air that in the pursuit of industrialisation, China, India and Russia jostle for space below the US as the world's biggest carbon gas emitters.

The US took more than hundred years to foul the world's air. India and China are doing it in less than fifty years and precisely for that reason claim the right to continue doing so.

Policymaking psyche

History has played a dirty trick on us. Mr Summers may have retracted, apologised hastily, claiming the memo as satirical in nature, not to be taken seriously; but the idea has wormed its way into our policymaking psyche.

How else are we to understand the argument India and other BRIC countries adopt at climate change forums, other than by reference to the memo's third reasoning? Mr Summers had suggested that the demand for clean environment “for aesthetic and health” reasons was income-elastic and therefore a cognitive response of advanced countries.

When India shies away from international efforts at consensual mitigation, it is effectively saying that a poor country on its way to economic growth has to get its priority right, and that perhaps excludes environmental safety.

What else does India's Prime Minister, Dr Manmohan Singh, mean when he blames US-based NGOs for whipping up sentiment against nuclear power?

Is he asserting the right of national governments to override social concerns for the sake of economic prosperity?

In India's stance on mitigation of carbon emissions and in the Prime Minister's complaint about the “foreign hand” working to scuttle India's march to affluence, what we hear are reverberating echoes of the Summers memo's advice to The World Bank — economic calculations must take precedence over a society's moral concerns, intrinsic rights and that any economic policy not bold enough to accept this hierarchy must fail.

India may fancy itself part of the rich man's club; but its prosperity bears testimony to the resilience of retrograde ideas meant to be sarcastic, ironical, afterthought literary devices. So is the joke on us?

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